Telefonica, a leading telecommunications company, has successfully issued a €750 million green hybrid bond with an 8-year non-call option.
The transaction garnered exceptional interest from institutional investors, attracting demand of up to €3 billion, four times the final issuance amount. The investor base was notably diverse, consisting primarily of international investors, contributing to over 95 percent of the total participation. Through this issuance, Telefonica managed to substantially enhance the terms, ultimately setting the final cost at 6.75 percent, down from the initial coupon of 7.125 percent. This reduction represents a noteworthy decline of almost 40 basis points.
The completion and final settlement of this transaction are scheduled for September 7th.
Additionally, Telefonica has concurrently presented an offer to purchase the hybrid bond with a redemption date in March 2024. This offer will remain open until September 5th, and the transaction itself is set to conclude on September 8th.
Laura Abasolo is the Chief Financial and Control Officer & Head of T. Hispam at Telefonica.
These strategic initiatives align with Telefonica’s proactive management of its hybrid capital base, further reinforcing its position as a leading issuer of environmentally, socially, and governance (ESG) financing in the global telecommunications sector. This green hybrid bond issuance also serves to propel Telefonica toward its objective of having 30-35 percent of financing activities comply with sustainable criteria by 2024.
As of the end of June, Telefonica had successfully addressed upcoming maturities for the next three years, boasting an average debt life of 12.4 years, with 80 percent of that being at fixed rates. The company maintains a robust liquidity position, surpassing €20 billion.
Commitment to Green Investment
Telefonica’s financial endeavors are firmly rooted in its commitment to sustainability, strategically integrated into its overall business approach and aligned with the United Nations Development Goals (SDGs). The company emphasizes the deployment of sustainable, resilient, and high-quality infrastructures and services, all of which contribute to socio-economic progress in the regions where Telefonica operates.
The funds secured from this green hybrid bond issuance will be allocated towards investments in environmentally responsible projects. These projects adhere to the categories outlined in Telefonica’s Sustainable Finance Framework, last updated in July 2023. The framework has received external validation through a favorable independent opinion from Sustainalytics. The projects will primarily focus on transforming and modernizing both fixed and mobile telecommunications networks, with the aim of enhancing energy efficiency. The allocation of funds may also extend to renewable energy generation initiatives, as well as the development of digital products and services designed to conserve energy and natural resources. These strategic initiatives serve as pivotal means of enhancing efficiency and reducing the carbon footprint.
Upon identifying and awarding projects, which must pertain to new or existing investments within three years prior to the bond issuance, Telefonica will provide annual reports on their environmental impact. These reports will encompass key indicators, including energy consumption per petabyte of data traffic, energy savings, and avoided CO2 emissions. Through such actions, Telefonica reaffirms its commitment to responsible business practices and sustainable growth.
